RF's Financial News

Sunday, November 30, 2014

You can fool some of the people all the time,
and all the people some of the time, but you can't fool all the people all the time… Abraham Lincoln.

Thoughts:

Dear Ms. Yellen:

Are we being played for a
fool?Let’s start with President Obama’s
immigration policy – especially as to how it applies to California.Just last week the L.A. Times reported the
following about Los Angeles County and their illegal immigrant population:

-40% of all workers (10.2M people) are working for
‘cash’, not paying taxes, and are predominantly illegal immigrants working
without green cards.

-95% of all murder warrants, and 75% of the ‘Most
Wanted List’ are illegal immigrants.

-66% of all births are illegal immigrants on Medi-Cal (paid
for by the CA. taxpayers).

-And almost 60% HUD occupied properties are illegal
immigrants.

I would be remiss and
foolish if I didn’t ask: Is there a PLAN to help California and the other
border states handle this huge influx of 5M new illegal immigrants?Or is the plan to bankrupt these states, make
them even more ‘beholding’ to the government, and to gather the 2016 Hispanic
vote for the Democrats all in one ‘fell’ swoop?

By now you know that
last Friday, OPEC decided (some thought foolishly) to keep oil production
levels unchanged.The effect of lower
oil prices is essentially QE4, as the consumer will have more money to
spend.Oil ended Friday slightly lower
then $66 per barrel with energy companies, oil transporters, and rigging
companies all ‘taking it on the chin’.In my mind, OPEC is playing us all for fools.J. Q. Public may cheer for lower gasoline
prices, but the bigger issue is our domestic oil and shale oil production –
that is getting significantly squeezed on margins and could see a decline if oil
prices remain under pressure.The
Saudi’s ‘get it’.They are willing to inflict
pain on our shale oil business, while at the same time put pressure on Russia's
exports. The Saudi’s can sell every drop
of their oil to China, and at the same time poke a stick in the eye of the
‘petro-dollar’.

-Disinflation pressure is continuing to rise, and bringing
with it the risk of deflation.

-The trade gap is continuing to widen, which is
beginning to stall U.S. GDP growth.

-And employment is coming under pressure as domestic
manufacturing and production slow.This
will cause U.S. multinationals to become less competitive, and encourage them to
expand overseas to avoid currency risk.

Ms. Yellen, is the
bigger fool the U.S. consumer?Factually, the largest driver of general consumer consumption is
credit.It’s not just houses and cars,
but understanding that the holiday season causes a huge expansion of credit
spending.Currently credit cards are the
number one consumer purchasing method.The average credit card balance for the U.S. consumer is: $7,743.Currently, the U.S. has over $847 billion in
outstanding consumer credit card debt. But the problem is NOT ONLY the
expansion of credit, but also stagnant wage growth combined with a questionable
ability to re-pay the debt.Using the
CPI to adjust for inflation, wage growth has actually declined over the past
decade. J. Q. Public’s ability to pay down debt is becoming
insurmountable, and producing larger balances carried for longer periods of
time.Everyone always talks about the
stock market rally, but seems to look past the parabolic debt acceleration that
has occurred during that same time period.

I always remember a
quote from Mark Twain:It is better to keep your mouth closed and
let people think you are a fool, than to open it and remove all doubt.

Markets:

Factually:

-Orders for U.S. business equipment unexpectedly
declined by 1.3% in October.

-Jobless claims increased more than expected – which
is rare for the holiday HIRING season.

-Durable goods orders (removing planes and cars) fell
by 0.9%.

-The Consumer Confidence Index was down sharply in
October.

-Wal-Mart had 22
million people visit their stores on Thursday and Friday.That is more people (in one day) than Disney World
gets in an entire YEAR.

The markets have been in a
dogfight for the past week.We opened
Monday with the DOW at 17,812 and ended the week at 17,828. While along the way there were dips and pops,
the overall market really only traded sideways. That's a little bit disturbing because the
Thanksgiving Holiday week is usually positive. But the market has felt ‘heavy’ for two weeks.
While the market makers have dug in
their heels and kept the wheels from flying off, I can sense a level of desperation
and ‘control’.I will NOT be surprised
if we see some true ‘red’ show up next week. A likely scenario is to see a bit of a pull
back for a week or two, and then a final run up into the Holidays for ‘the
Santa Claus rally’.

Right now the market is ‘flat’,
and probing for direction. The market
has certainly proven that it can pop higher for no apparent reason, but I’m
looking for a bit of ‘profit taking’ this week. It might not happen, as the market makers have
managed this market from command central, but it ‘feels’ like it should.

Tips:

The
OPEC meeting has caused a new shift in the market.With oil prices at a 4-year low, the oil stocks
and our largest sector (energy) have been crushed. This move should give
the consumer more discretionary income, and should push the retailers and the
airlines higher. But the market (in general) will have a more difficult
time going higher – in the face of a declining energy sector.I think we will see more volatility on the
horizon, and that large caps will do better than small caps in the short
term.I have been looking for the Russell
2000 Small-Cap Index to go lower this coming week, and therefore investing in
the TZA (the inverse ETF) should work nicely.This next week should be interesting as traders are back from the
holiday, and will begin to digest all of this new information.

My
current list of potential candidates includes: GILD, AAPL, WYNN, ALL, PII, HSY,
FLR, BMY, DPS, TEX, SLW, TRV, SPX, RUT, DUST, VXX, TZA, SPY, IWM, JNJ, MSFT and
UTX. Kroger (KR) reports earnings on Thursday, and I would like to
get a trade in Kroger if I can get a good set-up.

I’m looking at the
following Iron Condors (all with a Risk/Reward of less than 6:1):

-SPY and IWM going lower – which means that the
S&Ps are heading lower, and

-I’m showing JNJ and MSFT going higher.

To follow me on Twitter.com and on
StockTwits.com to get my daily thoughts and trades – my handle is:
taylorpamm.

Please be safe out there!

Disclaimer:

Expressed thoughts proffered within
the BARRONS REPORT, a Private and free weekly economic newsletter, are those of
noted entrepreneur, professor and author, R.F. Culbertson, contributing sources
and those he interviews. You
can learn more and get your free subscription by visiting: <http://rfcfinancialnews.blogspot.com>
.

Please write to Mr. Culbertson at:
<rfc@culbertsons.com>
to inform him of any reproductions, including when and where copy will be
reproduced. You may use in complete form or, if quoting in brief, reference
<rfcfinancialnews.blogspot.com>.

If you'd like to view RF's actual
stock trades - and see more of his thoughts - please feel free to sign up as a
Twitter follower - "taylorpamm"
is the handle.

If you'd like to see RF in action -
teaching people about investing - please feel free to view the TED talk that he
gave on Fearless Investing: http://www.youtube.com/watch?v=K2Z9I_6ciH0

To unsubscribe please refer to the
bottom of the email.

Views expressed are provided for
information purposes only and should not be construed in any way as an offer,
an endorsement, or inducement to invest and is not in any way a testimony of,
or associated with Mr. Culbertson's other firms or associations. Mr. Culbertson and related parties are
not registered and licensed brokers. This
message may contain information that is confidential or privileged and is
intended only for the individual or entity named above and does not constitute
an offer for or advice about any alternative investment product. Such advice
can only be made when accompanied by a prospectus or similar offering
document. Past performance
is not indicative of future performance. Please make sure to review important
disclosures at the end of each article.

Note: Joining BARRONS REPORT is not
an offering for any investment. It represents only the opinions of RF
Culbertson and Associates.

PAST RESULTS ARE NOT INDICATIVE OF
FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN
INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING
HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT
SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF
INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS
MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING
INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.

Alternative investment performance
can be volatile. An investor could lose all or a substantial amount of his or
her investment. Often, alternative investment fund and account managers have
total trading authority over their funds or accounts; the use of a single
advisor applying generally similar trading programs could mean lack of
diversification and, consequently, higher risk. There is often no secondary
market for an investor's interest in alternative investments, and none is
expected to develop.

All material presented herein is
believed to be reliable but we cannot attest to its accuracy. Opinions
expressed in these reports may change without prior notice. Culbertson and/or
the staff may or may not have investments in any funds cited above.

Remember the Blog: <http://rfcfinancialnews.blogspot.com/>
Until next week – be safe.

Sunday, November 23, 2014

Are we having an ‘all out’
currency war?The reason I ask is that
I’ve seen this behavior before – where assets, commodities and debt all begin
to lose their relationship with each other – and out pops the American
Revolution, our Civil War, World War I, and World War II.With China’s announcement of ‘almost’ QE on
Friday, I think that we are in a full-out currency war with the rest of the
world.

Just when I thought the
BRIC nations (Brazil, Russia, India & China) would be rational and watch
the rest of us (Japan, U.S. and Europe) fight it out – they have now decided to
act.I was shocked when China (the
world’s fastest growing and second-largest economy) announced an interest rate
cut of 40 basis points from 6% to 5.6%. They
also freed up deposit rates – allowing savers to participate in a higher
return.And, right on the heels of
China’s announcement, Europe’s Draghi ran to the nearest microphone to say that
the ECB will go ‘ALL IN‘ – doing everything in its power to do more QE.And this even triggered India to think about
doing ‘more stimulus’.

My take away from all of
this is:

-The global
economy is slowing – faster than I expected,

-The world is
hurtling towards a depression – faster than I expected,

-And every
central bank is going to try and destroy their currency in a bid to pay their
debts with cheaper money – faster than I expected.

I realize that the stock
markets will rally on the idea of more printed money, but we all know how this
ends.First it was Japan, then the U.S.,
then Japan again, now China, and soon Draghi will try his best to circumvent
the entire Euro zone Charter and find a way to print more money.

Ms. Yellen, doesn’t this
put you into a tricky situation?The
general expectation is that the Fed will raise rates at the beginning of next
year. However, with your measuring stick
of inflation (CPI) recently ticking lower to 1.7% - doesn’t this raise a
‘deflationary’ concern?And now with
China, Japan and Europe all ‘putting the squeeze on’ – couldn’t we easily see
the CPI contract to 1.5% as the dollar index spikes to 90 or higher? And won’t this ‘spike higher’ (a) widen the trade
gap, (b) negatively impact every multi-national company’s top-line revenues, and
(c) cause manufacturing jobs in the U.S. to shrink and (once again) move
abroad.

Ms. Yellen, my questions
are:

-How long can you
take the pain of a strong dollar, and the risk of deflation?

-And with Japan’s
announcement (last week) of them dipping into a recession – isn’t that a vote
against QE?(As an aside: One of Japan’s
latest ideas is to hand out gift cards to ‘poor people’ and let them go and
‘buy anything they want’.I can’t make
this stuff up!)

Ms. Yellen, can you tell
me again how all of this ends well?

The Market:

In a world where the BRICs
(Brazil, Russia, India & China) are joining together to form their own
financial bank and trading agreements, and as nations have attempted to move
away from the U.S. dollar – a pattern of behavior seems to have emerged:

-Remember Libya's
Ghaddafi?He declared that he wanted to begin
to refuse the dollar.He called on all
Arab and African nations to establish a new African continent using a new
currency – the gold dinar. What was the
outcome for Mr. Ghaddafi? He was
overthrown by the U.S. government and NATO, and later killed.

-Remember Iraq’s Saddam?He declared that he wanted to sell his oil
for Euro’s instead of U.S. dollars.What
was the outcome for Saddam?The U.S. invaded
Iraq due to terrorism and suspicion of harboring weapons of mass destruction – he
was later killed.

-Remember Christophe
de Margerie – the CEO of ‘Total’ the huge French oil conglomerate. This
is what he said this summer concerning the purchase of oil in U.S. dollars: “It
would be good if the euro was used more. The fact that oil prices are quoted in
dollars per barrel does not mean that payments actually have to be made in that
currency. There are no valid reasons to pay for hydrocarbons in the American
national currency." He also
spoke out against the Russian sanctions imposed by the U.S. What was his outcome?He was killed in a ‘freak’ plane crash.

So, you either jump
on board with the U.S. dollar – or you end up ‘dead’ is the way that I see it.

In terms of the market, the
bottom line is that this market is grossly overbought. Central Banks are hoping
that by pushing the market to insane heights it will cure the economy's ills. It won't, but it seems like the last option at
this point. The only thing holding this market
up is the banksters and their behind-the-scenes maneuvers.I can see them pushing the market higher,
trying to keep everyone feeling good for the Holiday shopping season – but
that’s a nervous ‘hold’ for me.

If you've been in this
game as long as I have, you've seen:

-The ‘Tech’
Bubble of the late 90's – and the resulting crash,

-The ‘Housing’
Bubble – and the resulting crash,

-The ‘Credit’ Bubble
– and the resulting crash / financial meltdown,

-And now we're in
the ‘Central Bank’ bubble – it too will crash.

There is a good reason why
so many of the most respected fund managers are woefully behind the market this
year. This year most of them remained on
the ‘side lines’, or put very little of their cash to work.They are seeing the same things that I do and
that is: no volume, Central Bank rigging, and earnings created with buy-backs. This is NOT a signal of a healthy market.

This week we saw the
Chinese cut rates, Draghi go "ALL IN" on QE, and Obama shortcut the
Constitution and print trillions more dollars in order to accommodate 5 million
more ‘new citizens’.All that was enough
to send the market soaring on Friday.

History shows that we normally
levitate up through the Thanksgiving Holiday, and I could easily see them doing
that again.But, it’s going to be more
of a struggle this time.When you have
China cutting rates, Draghi starting QE, and we can't even hold a 100-point day
– you know that things are desperate.This market is tired and heavy.I’m
going to approach this week as I did last – leaning long but with my finger
near the sell button.

I wish everyone a Happy
Thanksgiving.It’s my favorite holiday,
and I truly enjoy spending time with friends and family.

Tips:

I am not
bearish here, but I continue to feel that more consolidation is in
order. I talk to other traders, and we scratch our heads looking at
the last 5 weeks. I know it seems like ancient history, but if you recall
– remember all the gloom and doom 5 weeks ago when the S&P was at
1817? We are currently at 2071, which is 254 points ‘straight
up’ in 5 weeks. If you have traded for very long, you have seen this
game before and you know how it ends. I certainly don’t want to
fight this move as we will likely have even more upside, but everyone being so
bullish and ‘risk-on’ makes me nervous.

I’m looking at the
following Iron Condors (all with a Risk/Reward of less than 4:1):

-GILD – Dec1 –
92/93 to 108/109 for $0.19,

-IBB – Dec1 –
275/277.5 to 310/312.5 for $1.18,

-IBB – Jan 2015 –
260/265 to 325/330 for $1.15,

-RUT – Jan 2015 –
1060/1070 to 1260/1270 for $$1.88,

-WYNN – Dec1 –
169/170 to 190/191.5 for $0.30, and

-WYNN – Dec 2014
– 164/165 to 194/195 for $0.20

To follow me on Twitter.com and on
StockTwits.com to get my daily thoughts and trades – my handle is:
taylorpamm.

Please be safe out there!

Disclaimer:

Expressed thoughts proffered within
the BARRONS REPORT, a Private and free weekly economic newsletter, are those of
noted entrepreneur, professor and author, R.F. Culbertson, contributing sources
and those he interviews. You
can learn more and get your free subscription by visiting: <http://rfcfinancialnews.blogspot.com>
.

Please write to Mr. Culbertson at:
<rfc@culbertsons.com>
to inform him of any reproductions, including when and where copy will be
reproduced. You may use in complete form or, if quoting in brief, reference
<rfcfinancialnews.blogspot.com>.

If you'd like to view RF's actual
stock trades - and see more of his thoughts - please feel free to sign up as a
Twitter follower - "taylorpamm"
is the handle.

If you'd like to see RF in action -
teaching people about investing - please feel free to view the TED talk that he
gave on Fearless Investing: http://www.youtube.com/watch?v=K2Z9I_6ciH0

To unsubscribe please refer to the
bottom of the email.

Views expressed are provided for
information purposes only and should not be construed in any way as an offer,
an endorsement, or inducement to invest and is not in any way a testimony of,
or associated with Mr. Culbertson's other firms or associations. Mr. Culbertson and related parties are
not registered and licensed brokers. This
message may contain information that is confidential or privileged and is
intended only for the individual or entity named above and does not constitute
an offer for or advice about any alternative investment product. Such advice
can only be made when accompanied by a prospectus or similar offering
document. Past performance
is not indicative of future performance. Please make sure to review important
disclosures at the end of each article.

Note: Joining BARRONS REPORT is not
an offering for any investment. It represents only the opinions of RF
Culbertson and Associates.

PAST RESULTS ARE NOT INDICATIVE OF
FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN
INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING
HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT
SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF
INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS
MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING
INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.

Alternative investment performance
can be volatile. An investor could lose all or a substantial amount of his or
her investment. Often, alternative investment fund and account managers have
total trading authority over their funds or accounts; the use of a single
advisor applying generally similar trading programs could mean lack of diversification
and, consequently, higher risk. There is often no secondary market for an
investor's interest in alternative investments, and none is expected to
develop.

All material presented herein is
believed to be reliable but we cannot attest to its accuracy. Opinions
expressed in these reports may change without prior notice. Culbertson and/or
the staff may or may not have investments in any funds cited above.

Remember the Blog: <http://rfcfinancialnews.blogspot.com/>
Until next week – be safe.

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